GST/HST on orders
By Megan Goodacre
It's official and long overdue: GST/HST is now added to Tricksy Knitter orders if the customer's shipping address is in Canada.
Are you a small business owner? Then you'll empathize with the ass-ache of figuring out sales tax for online sales being virtually delivered to thirteen different provinces and territories. You must figure out how much to charge, how to document what you're charging, and how to get technology to cooperate with you. If you sell on your own site, and on Ravelry, and on Craftsy, then you have to make sure it's working in all those stores.
Because much of what is sold on Tricksy Knitter is delivered virtually, it's mind-meltingly abstract to figure out where the transaction is actually taking place.
Here's the gist*, after some very thorough research, which you might find useful if you are selling stuff online:
* Dude, I am not a tax expert.
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Are you a small business owner? Then you'll empathize with the ass-ache of figuring out sales tax for online sales being virtually delivered to thirteen different provinces and territories. You must figure out how much to charge, how to document what you're charging, and how to get technology to cooperate with you. If you sell on your own site, and on Ravelry, and on Craftsy, then you have to make sure it's working in all those stores.
Because much of what is sold on Tricksy Knitter is delivered virtually, it's mind-meltingly abstract to figure out where the transaction is actually taking place.
Here's the gist*, after some very thorough research, which you might find useful if you are selling stuff online:
- GST/HST is charged on most goods and services, with a very short list of exceptions.
- Canadian sellers must remit GST/HST on all applicable sales, even if they don't collect it! See Small supplier exception at the end.
- Each province has its own sales tax rate. HST (5% Federal + Provincial): Ontario 13%, New Brunswick 13%, Newfoundland 13%, Prince Edward Island 14%, Nova Scotia 15% (ouch!). GST only (5%): Alberta, North West Territories, Nunavut, Yukon. GST 5% + PST/RST/QST: British Columbia, Manitoba, Quebec, Saskatchewan
- Which province's rate to apply is determined by the "place of supply." In plain-speak, the place of supply is where the customer gets their stuff. So, you might download a pattern via the ether from me in Ontario, but it goes to your computer, tablet, printer, etc, where you are, which is your shipping address (even if there is no actual "shipping" with a digital download). Here are the words from the mouth of the CRA itself. Enjoy parsing this bit of writing: Generally, there are four general place of supply rules that apply to supplies of services. These general rules do not apply to supplies of services in certain cases where specific place of supply rules apply...A supply by way of sale of goods is deemed to be made in a province if the supplier delivers the property or makes it available in the province to the recipient of the supply.
- GST/HST is applied to Shipping and Handling (there is a bit of a misconception on the web about this, that shipping is somehow exempt. No such luck as far as I can tell. It's a service that allows the seller to make a good or service available in the "place of supply". There are different tax rules for postage stamps, maybe that's where the idea started?)
- Although online retailers are encouraged to collect Provincial tax for all provinces they ship to, it is only required if they: sell to the province and market in the province. Since I don't advertise in individual provinces, I do not charge provincial tax. The provinces would prefer that I did, but that would be a crazy amount of paperwork for a small number of sales. (Although I'm a Canadian seller, most of my sales and web traffic come from the US). Actually, if you are in a province that charges provincial sales tax, and you buy out of province and are not charged provincial tax, you are expected to "self-remit"!
- If you are a small business, and you collect and remit GST/HST, you can deduct the GST/HST paid on (most) business expenses as ITC's (input tax credits).
- For sales with a pretax total of $30 and up, I am required to display the Tricksy Knitter business number. At the time of this writing, my PayPal account does not give me the option to modify the PayPal receipt. So if you need a receipt for tax purposes, use the Tricksy Knitter receipt, which shows the GST/HST number.
- Small suppliers do not have to collect and remit GST/HST. A small supplier is a business or individual with total sales under 30000 in any 4 consecutive quarters. But be careful! The 30000 is all worldwide sales, not just taxable sales. (So, watch out. For example, if you sell on Ravelry, Etsy, craft shows, and charge for gardening, dog-walking, and teaching workshops, all of that is added up together, unless you have separate business numbers. And the GST/HST people are very serious about getting payable tax, and about penalizing for mistakes!) The moment your sales go over 30000, you become responsible for remitting GST/HST (whether you have collected it or not) starting in the quarter where your sales went over the limit.
* Dude, I am not a tax expert.
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